Fidelity backs bonds

Britains biggest fund manager has turned against commodities and shares for its first fund launch of the year, writes Kathryn Cooper

Bosses at Fidelity, Britain’s biggest fund manager, are backing bonds over shares and commodities this year as the global economy heads for a slowdown.

Their stance is bound to raise eyebrows because bonds have produced such poor returns recently and most analysts are still loath to bet against the equity and metals markets after three years of exceptional returns.

Global bonds have dropped 4.5 per cent since 2004, compared with a return of 40 per cent from global equities and a staggering 163 per cent from commodities.

However, Trevor Greetham, asset allocation director at Fidelity, thinks bonds are set to come back into fashion based on a rigorous analysis of how different assets perform at various stages of the economic cycle.

In its first fund launch of the year, the Multi Asset Strategic Fund, it will use this analysis to switch between shares, bonds, commodities, property and cash depending on prevailing